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Inquirer Editorial: Education tax credits a good idea, but at what cost?

Proponents of the tax credits say they save public education dollars, because businesses are picking up the tab for students to attend private schools. The Commonwealth Foundation even describes the EITC program as "funded through voluntary contributions from businesses."

We like the idea of corporations stepping up their responsibility to education. But the way these credits are structured, taxpayers actually end up footing the bill for nine out of every 10 dollars spent, sometimes more, according to a recent study by the Pennsylvania Budget and Policy Center.

That's because businesses can recover 75 to 90 percent of the money they donate in outright credits applied to their tax bills. In addition, companies can also take federal and state tax deductions for charitable contributions — which means that a company can make a $300,000 contribution and end up actually spending $20 a year in out-of-pocket costs.

Given that most of these credits are designed to help students pay for private or parochial schools, it's no wonder that critics call this "voucher lite." We would have less of a problem with public money funding private or parochial schools if those schools were held accountable for performance and required to be transparent with how money is spent. But they're not.

And the tax-credit program builds in additional protections from scrutiny. The program is overseen and administered not by the Department of Education, but the state Department of Commerce and Economic Development. A legislative committee's detailed review revealed a number of problems with oversight, including the fact that the DCED doesn't even staff its program-monitoring units. And there is no monitoring of outcomes for students who get scholarships to non-public schools. It's like the kids get public money to go off the grid and we never get to find out if that money actually improved achievement.

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And the stakes are even higher when you consider the full range of Pennsylvania's tax credits — $344 million in 2009-2010, with little oversight or monitoring.

It's clearly time to acknowledge tax-credit programs for what they are: not "vacation money" that doesn't really count, but actual expenditures that should be managed and overseen far more seriously than they are.